Tesla is supposed to begin payments in December and has until October 31 to put together a proposal outlining its faster repayment schedule. This new schedule is required because of a September 24 waiver that changes Tesla's specified current ratio of assets to liabilities, writes Bloomberg News. Tesla CFO Deepak Ahuja told Bloomberg that the company could beat its 10-year repayment schedule if Tesla becomes profitable earlier than expected. Thus far, the DOE told Bloomberg, "Tesla has made loan payments on time and in full."

Earlier this week, Tesla, which has never been profitable, reduced its 2012 revenue forecast by about $160 million to as much as $440 million because of supplier issues and other delays related to the Model S, and said it was about a month behind schedule with its vehicle deliveries. As of September 23, reservations stood at about 13,000. Tesla said in July that it may start repaying its loan before its first payment due-date in December. As of late June, Tesla had yet to draw down the last $33 million of the loan.

Tesla Information

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Anonymous

2 Years Ago

Building one or two rockets/space vehicles with a few tens of people has a much different economics than building a large number of consumer vehicles at much lower price points, but yet no compromises on quality and performance.

Anonymous

2 Years Ago

I "plan" to date model Kate Upon... which pretty much means it is not going to happen. This is ultimate spin from Tesla because they screwed the pooch and nobody wants a Tesla, nobody wants Solar City panels and Space X rockets keep failing so Musk told is freaking out and traded some BS warrants with DOE to make the announcement which means nothing. What means something is that any real car company sells 100,000 cars of each model and usually 400,000.. Tesla has only sold a few hundred to its investors have a decade of trying and nearly a billion dollars of free tax money... FAIL!

Danny King... you are just now taking a Bloomberg article from last week? Turns out, it was all wrong. Elon just set the record straight. http://www.teslamotors.com/blog/update-elon-musk And, "perhaps should have emphasized it more: we expect Tesla to become cash flow positive at the end of next month." -Musk

So we'll see this article on ABG in the next few days but here you go. Romney labelled Tesla and Fisker as wasteful spending by Obama in tonights debate. He specifically said that $80 Billion was wasted on green energy incentives. Obama unfortunately had no response to the allegation. How much is spent yearly that leaves the country because of oil and gasoline? A lot more than $80 billion.

@ Grendal To be fair, how much of that $80 billion returns to the US in investment, trade etc ..? It's not necessary to demonize oil, to understand the importance of developing alternate energy. Much of the conservative criticism worldwide, has been as a result of exaggerated claims, and poorly monitored and supervised schemes funded by taxpayer investment. Much of this investment has been ideologically motivated, and the scientific due diligence very flawed. The explosion of populist, trendy environmentalism combined with leftist ideology saw a great deal of private and public investment wasted in poorly planned and impractical projects. Although the hysterical reaction of the US ultra-right is completely without any merit , more moderate conservatives are quite right to criticize wastage of public funds on projects of dubious value. Mitt Romney is wrong to criticize either Tesla or Fisker ! Until either defaults on their DOE loan guarantees, neither organization has cost the US taxpayer a dime ! It's also a poorly conceived strategy for a man who wants to lead the US to be seen attacking vulnerable US industrialists, and their employees !

Marco, Yes. Though I did immediately go to oil and gas my point was not to demonize them but point out that those national expenditures are simply lost. Investment in advanced energy technology and transportation should be a priority in the US that expands beyond transitory political ideaology. The ICE is the engine that will continue to drive industry for many decades to come but the writing is on the wall that it needs to be phased out. The conservative right and Romney should be all for Tesla, Fisker, and quite a bit of the green energy movement. Instead they have demonized it for their own political agenda. I'm also upset at Obama for being unprepared for that political attack. He could have made any number of statements to derail the attack but instead he changed the subject to focus on his own agenda. I hope he's prepared to respond in the next debate.

The most simple way would have been to point out that the loans were from a Bush program. And why did Bush put those programs in place? To support American industry. Obama needs to have a response to the same statements we see here regularly: "It's not the governments job to pick winners and losers."

I'm not so sure it is good for Tesla. The production that TM absolutely needs to have even a chance of surviving isn't happening now more than 3 months into production. They've only delivered around 100 cars, it's quite odd. And TM seems to have spooled up to a very costly machine by now with 3000 mouths to feed plus facilities and utilities which means they are burning cash faster than ever before with almost no income. I expect Q3 is yet another record loss which makes me think that even if they get the 200m$ cash infusion they will just burn through that in no time as well. Which is bizarre since 200 million is a rather large amount of money. Spacex was created and did two launches to space for 100 million. I'm very puzzled by what's going on at TM

Anonymous

2 Years Ago

@Giza Plateau

Building one or two rockets/space vehicles with a few tens of people has a much different economics than building a large number of consumer vehicles at much lower price points, but yet no compromises on quality and performance.

Check out https://docs.google.com/spreadsheet/ccc?key=0AqeF0BCgQY1TdC1WQk53Z0h0UERORWw5U3NYM1pYR2c#gid=0 It's a list of Tesla deliveries reported to the club. They are at 174 right now but I doubt that every single owner is reporting their car.

Anonymous

2 Years Ago

@Giza Plateau

Building one or two rockets/space vehicles with a few tens of people has a much different economics than building a large number of consumer vehicles at much lower price points, but yet no compromises on quality and performance.

Anonymous

2 Years Ago

@Giza Plateau

Building one or two rockets/space vehicles with a few tens of people has a much different economics than building a large number of consumer vehicles at much lower price points, but yet no compromises on quality and performance.

Giza: Just a couple of comments to your key points: "The production that TM absolutely needs to have even a chance of surviving isn't happening now... with 3000 mouths to feed plus facilities and utilities..." This is really the key issue. Three months to be "ramping up" doesn't exist in the auto business. Tesla is doing the "learn as you build" method, now seen only in defense programs. If you have a customer who pays progress payments, it's great. No so much with cars. But your point on the huge growth in labor force and hours is important, and clerly illustrates why no one does what Tesla is doing. The Fremont line is using two shifts and weekend labor to produce at a 10-20% fractional rate when the line was touted to be 20,000/year with a single shift. Margins will be TERRIBLE through Q4, despite topped-out option lists and the $3K Sig Premium on the first 1200 cars. Getting to the putative 25% GM on a $75-80k car is something that will never happen from where I sit. "... which means they are burning cash faster than ever before with almost no income." Right again. In a post about 1.5 months ago I had said they would have less than $100M by the end of Q3; reading the 8K it appears that, without the raise and the loan reserve deferral, they would have been down to ~$65M. The recent raise will help keep the doors open, but the burn rate is not going down. "I expect Q3 is yet another record loss which makes me think that even if they get the 200m$ cash infusion they will just burn through that in no time as well." Well, you're right about the loss. If you plug in numbers based on the 8K and other stuff we can actually figure out, we should expect at least $110M in losses. My instinct for these things says more like $120-125M, but one should not depend on instinct when $$ are at stake. Anyhow, ($110M) would indeed be another record. As for the raise, they have already placed shares so the ~$200M is in their pockets. They will go through it all in six months without some sort of deus ex machina. The early Loan repayment is NOT some sort of positive Tesla news. They have received four rounds of amendment/deferral for a variety of favorable (to Tesla) changes, and the DoE needs to get some improvement in the prospects for repayment. Keep in mind that the amendment granted in the last weeks of September reflected that Tesla, who had raised over $450M (with an additional ~$150 or so planned) with a $3B+ market capitalization, and planning to build $250M worth of premium automobiles over the next 3 months, could not scrape together $30M for a cash reserve deposit. This is NOT a pretty picture. But, of course, Musk will come through with his own money to make it all right if things go all pear-shaped. For sure.

From page 2 of the 8K published 25 Sept: "We now anticipate that we will deliver between 200 and 225 Model S vehicles to customers in the third quarter and between 2,500 and 3,000 Model S vehicles in the fourth quarter. As such, we believe we will be approximately four to five weeks behind our previously announced Model S delivery goals as of the end of 2012. As of September 23, 2012, we have delivered 132 Model S vehicles to customers which includes 42 vehicles delivered during the week ended September 23, 2012." So, if they delivered somewhere between 68-93 cars in the final days of Sept as committed, and put another 30 or so in buyers hands since then, we're more or less where Grendal pegged the number.

They've delivered over 250 cars with more every day. They're at 100 cars a week and need to get to 400 a week. They are still ramping up. The $200 mil gets them the cushion they need to achieve the ramp up successfully. What's complex about that? It takes time to get a complex manufacturing process flowing smoothly. Math-wise they went from one car a day to 20. That's a twenty times increase. Now they need to go from 100 to 400. That's just a 4 times increase. It's is a critical increase because profit is made and retained in that final increase. It's still a lot smaller ramp than the first one.

What oktrader said. Q3 report. Now we're 3 days into the 4th quarter and deliveries are ramping up too. Currently around 20 cars a day are being built. I'm actually assuming the deliveries are running behind that number. My main point was 100 was way too low.

Check out https://docs.google.com/spreadsheet/ccc?key=0AqeF0BCgQY1TdC1WQk53Z0h0UERORWw5U3NYM1pYR2c#gid=0 It's a list of Tesla deliveries reported to the club. They are at 174 right now but I doubt that every single owner is reporting their car.

@ Oktrader, 2WM, has a point. While any notion of a conspiracy is absurd, it's important to remember what the objective of the DOE was in advancing these loans. Tesla has achieved a remarkable feat in bringing this car to market. The model S is a showpiece of US EV technology. The investment by the US taxpayer in bringing about this enhancement in US industrial prestige and creation of thousands of jobs, has been negligible. As Tesla Motors struggles into market competition, ( mostly against imported marques) perhaps the US government should contemplate relieving some of the pressure on Tesla by converting some debt to bonds, or granting Tesla export incentives, employment bonuses, and other incentives. None of the actions would be unfamiliar in the other automotive manufacturing nations, and would help secure Tesla's viability. ( and the taxpayers' objective),

They don't actually say what kind of timetable they are looking at yet and Tesla could propose an incremental payback system based on their revenue or profit. Or they could just say, "look, we're broke right now, you either wait a bit more or we go bankrupt and you lose out big time"

This article wonderfully free of accuracy. Hooray! Reality: http://www.teslamotors.com/blog/update-elon-musk RE: Romney's slam. He's a 'tard. He wouldn't know innovation if it bit him in the ass. He's never taken a risk. He built his fortune using other peoples money, buying up and liquidating other peoples companies while ensuring that even when he failed, he and his partners got their cut. He's nowhere in the same league as Elon Musk (or any other modern entrepreneur (Jobs, Gates, etc)). That people hold him up as an example of American business is sickening.

Comment, I won't address any of the foolishness in your note except this one: "He's never taken a risk." If you had an inkling of a smidgeon of a particle of understanding of what private equity firms do, and what it means to personally raise the funds to enable such an enterprise, you would be shamefully embarassed by what you posted.

Gotta say, this situation with Tesla gets under my skin. They have been hard at work since the mid 2000's to get electric cars out there, and they spent about 5 years basically losing money on everything. Now they finally have a viable and good car in production, and suddenly the DOE wants their money back just as they're starting to make $, but they may go bankrupt due to production problems. I hate to sound like a conspiracy theorist, but electric cars ( or their companies ) have been going extinct right at the finish line for a long time now. It is just really fishy. I hope we do not get a third chapter of 'who killed the electric car' here.

Your impression of the situation is incorrect, 2wm. Here's the whole story. On 15 Jan 2011, the year-old Agreement was amended to expand cash investment options. It's arguable this was a reasonable alteration allowing more-or-less "normal" use of the disbursements. I'm less charitable, and I'm convinced that the Amendment was needed because Tesla's projections were far too optimistic and they just needed the cash. Regardless, they were given expanded scope of Loan application. In late 2011, it was increasingly clear to practically everyone that Tesla would not be able to meet debt service coverage ratios in the original agreement. This would technically place them in default. DoE agreed to waive of those covenants on 22 Feb 2012; in return Tesla committed to funding the first three repayment installments in a "do not touch" reserve ("restricted cash" on their balance sheet). Tesla funded the 1st repayment installment in Feb, as agreed, with the understanding of another $30+ million "deposit" to the reserve in mid-Oct for the second and third repayment installments. More to come on this... On 20 Jun 2012, there was another amendment to allow additional freedom in the use of resources. I would argue this admendment allowed the application of ATVM cash well outside the intent of technology development. Again, regardless of whether you and I would agree, it was ANOTHER allowance in favor of Tesla. Meanwhile, back in the Tesla Hall of Accounting, it seems that there was insufficient planning, intent, funds... whatever to meet the Oct repayment reserve agreement. The latest modification that you are reading in the article > removed the obligation to comply with financial covenant for Q3: > postponed repayment reserves until 15 Feb 2013, with the first $14.6M originally due in October: > made additional pre-funding payments, beginning June 2013, of "between $14.2 million to $14.5 million each quarter to pre-fund the quarterly principal and interest payments due from September 15, 2013 through December 15, 2014"; and > required Tesla to "work in good faith with the DOE" to develop an early repayment plan before end of Oct. If anything, there has been a consistent "conspiracy" to lighten Tesla's commitments.

According to Musk himself... "The DOE has simply asked if we would be willing to repay the loan early if we have excess cash. The answer is unequivocally yes and I am happy to announce that we will be initiating an advance payment today to prefund the principal payment that is due in March 2013." -Elon Musk http://www.teslamotors.com/blog/update-elon-musk

joe: I genuinely admire Musk's ability to maintain an optimistic view. No agressive, burn-the-ships-and-do-the-impossible enterprise leader has ever survived without creating an absurdly upbeat view of fearsome reality. From Kelly Johnson's Skunkworks through Jobs and now Musk, the Captain of the vessel can't let setbacks frighten the Officers and Crew. I get it. But in this case he sounds not so much like Capt. Jack Aubrey than the Black Knight: "It's just a flesh wound!" The DoE did not "simply ask if Tesla would be willing to repay the loan early if they have excess cash". Tesla has been unable to meet a gradually more and more accomodative set of conditions created by three Amendments in two years, from debt ratios to funds application to payment reserves, among others. In exchange for significant concessions on the part of the DoE, Tesla is REQUIRED to offer an early repayment plan. This was by no means a casual inquiry, as characterized by Musk. Honestly, if one of your kids ever goes out for a drive with friends but comes back home in the back seat of a police cruiser, and then tells you "the cop just wanted to know if he could give me a ride", you should probably ask a few questions.

"Tesla has been unable to meet a gradually more and more accomodative set of conditions created by three Amendments in two years, from debt ratios to funds application to payment reserves, among others." -oktrader "At the risk of being repetitive: Tesla has always made its DOE payments on time and has never asked to delay repayment ever. I don't know how to state this more clearly." -Elon Musk, Tesla Motors CEO I don't see how your statement jives.